While Delta keeps humming along and United surges ahead, American remains in a funk. It is still trying to figure out what it wants to be after throwing previous Chief Commercial Officer Vasu Raja’s strategy out the window last year. Now it is reshuffling its ranks to try and create a commercial organization that is more focused on the premium experience that its competitors long-ago embraced.
In this case, American is decentralizing, moving away from when Vasu was the center of power and strategy, instead choosing to create an army of Senior Vice Presidents who will then have to coordinate with each other. To me, this feels like a move that’s more out of necessity than strategy. There just isn’t any one person to fill the giant void that Vasu left behind.
How We Got Here
For the years coming out of the pandemic, CEO Robert Isom ceded the airline’s entire commercial strategy to the mind of Vasu. He had bold ideas and plenty of vision, but in practice it did not work out the way the airline hoped. The vaunted Northeast Alliance with JetBlue was shot down by a judge, the credit card deal kept getting delayed, and the complete re-do of the sales organization led to disastrous results.
It was the latter that seems to have proven to be the death knell for Vasu’s time at American. The airline slashed and burned its sales force, and forced agencies and corporates to book through channels that weren’t ready for prime time. Those corporates balked and moved their business elsewhere, and Wall St was not pleased. I don’t need to rehash all this, but suffice it to say that when Vasu was shown the door last May, it wasn’t a surprise. Robert needed someone to blame even though he’s the one ultimately responsible for what happens at the airline.
The problem for Robert was that this left an enormous hole at the airline in the commercial area. There was no visionary commercial leader, nobody who would push hard to get things done any longer. Vasu had tried to fill the gap held by Scott Kirby before he was pushed out and went to run United, but there was nobody to step in when Vasu was pushed out himself.
The first move Robert made was to turn to a trusted lieutenant, Steve Johnson. Steve had been at America West back in the day before leaving for a few years, and is the Swiss Army Knife of the airline. He’s a lawyer by trade, and he’s very smart. But he’s not a commercial guy at all. His job was to stabilize the ship and try to fix some of the sales damage that had been done. Now it’s time for round two.
The New Plan
Instead of consolidating under a Chief Commercial Officer, American is relying on eight Senior Vice Presidents to run their own fiefdoms and report up.
The only thing that stays the same so far is that Brian Znotins will remain SVP of Network Planning and Scott Chandler will stay as SVP of Revenue Management. They will continue to report to Steve Johnson. I guess you could count Anmol Bhargava’s role over Alliances as also being the same, but he is being promoted to SVP.
Scott, however, loses loyalty which oddly had been folded into revenue management not that long ago. AAdvantage and credit cards will now fall under a new Scott, Scott Long. This Scott was previously in investor relations, but he’s held other roles in the company. It sounds like his primary job now will be to get this new credit card deal implemented. Oh, and loyalty stuff and things.
Meanwhile, over in sales, there is a new SVP in town and it’s Lucas Martin. Who, you ask? He’s an outsider. Lucas was one of the guys at Bain who was brought in to try to find out how to fix the sales mess after Vasu was shown the door. He has no background working for an airline. He is a Navy guy and was an assistant professor at the University of Virginia before he joined Bain, where he’s been for more than 13 years.
Of course, coming up with solutions and implementing them are two different skill sets, so we’ll see how this works out. He isn’t doing this alone, however. Under him will be Neil Guerin who has been in distribution and sales for years and was promoted to VP as part of this move.
You might be wondering what this means for yet another Scott, Scott Laurence. That’s the man who Vasu turned to for help with all sorts of different partnerships ranging from airlines to distribution systems, and yes, even sales was considered to be dealing with a “partner.” Scott had been running sales in the aftermath of Vasu’s exit, but now he will be SVP Commercial. This looks like a fluffy title with no real responsibility. My assumption is that he’s being pushed aside, and I’d be surprised if he stays around for long. The announcement of his change in roles certainly sounds like a funeral.
I’ve asked Scott Laurence to take on the new role of Senior Vice President, Commercial, continue his work on our sales efforts, and work with me on special projects across Commercial. We can’t thank Scott enough for his leadership over the past few years and for his commitment to helping us reestablish relationships with the indirect channel community and reinvigorate our sales and distribution efforts. And I am now looking forward to the opportunity to leverage his brainpower on a broader set of Commercial challenges over the coming months.
For those keeping score at home, that means there are now three SVPs named Scott and three that aren’t. But wait, there are two more.
Caroline Clayton is now SVP of Corporate Communications and Chief Marketing Officer. She technically isn’t on the commercial team, but running marketing, she has to be a part of it some way or another.
And lastly, there is a new Chief Customer Officer who will report to both Steve Johnson and COO David Seymour. Who gets this impossible task? It’s Heather Garboden.
Heather’s career started just a little after mine, also doing pricing and revenue management at America West. (We didn’t overlap, if you’re wondering.) But for the last 15+ years, she’s been in finance. It’s an odd background to tap for a customer role. That doesn’t mean she isn’t capable, but having to report to two masters? That’s going to make it really hard to succeed no matter how capable she is.
So, we now have six SVPs trying to drive their departments forward with all of them — at least partially — still reporting to someone who isn’t a commercial expert. That means being an SVP under Steve has a lot more responsibility than it did under Vasu where strategy was driven more from the top down.
Perhaps this is what American really wanted to do, or maybe it’s just that American couldn’t find anyone able to take on the Chief Commercial Officer role. Now it will have six choices for the future if it decides to go that route. We will see which ones are able to step up and which ones will not.
